On Friday, the U.S. Department of Labor (DOL) published its Final Rule governing tipped employees. The DOL kept the sweeping changes to the regulation of employees paid using a tip credit wage, which it introduced this past June in its Notice of Proposed Rulemaking (NPRM). Buttressed by the 11th Circuit’s recent decision in Rafferty v. Denny’s, Inc., which adopted the 80/20 rule, the DOL changed little from the NPRM despite considerable pushback from industry interests. The DOL codified the 80/20 rule and now limits tipped employees’ performance of duties that directly support the tip-producing work to 20 percent of the workweek and no more than 30 continuous minutes. Work that falls outside these limits and work that does not qualify as either tip-producing work or directly supporting work must be paid at full minimum wage.

Amendments Proposed in the NPRM – Duties

The NPRM proposed to replace the regulatory framework that determines what duties are part of the tipped employee’s occupation. Specifically, the NPRM clarified that a tipped employee who performs duties that are not part of the tipped employee’s occupation is disqualified from the tip credit wage because he or she is no longer meeting the requirement of working in a “tipped occupation.” See 29 U.S.C. § 203(t). The key proposed amendment declared that “an employee is only engaged in a tipped occupation under 29 U.S.C. § 203(t) when the employee either performs work that produces tips, or performs work that directly supports the tip-producing work, provided that the directly supporting work is not performed for a substantial amount of time.” See Prop. DOL Reg. § 531.56(f).